Zscaler is reporting new milestones and posting record operating margins, as its chief executive warns that artificial intelligence is opening fresh attack surfaces for enterprises worldwide.
The cybersecurity firm reports fourth-quarter revenue of $719.2 million, up 21% year-over-year, and annual recurring revenue rose 22% to $3.015 billion.
Calculated billings reached $1.2 billion, up more than 30% from last year. Free cash flow hit $171.9 million, or 24% of revenue.
During the firm’s earnings call, CEO Jay Chaudhry says Zscaler’s platform has secured nearly 40% of the Global 2000 and more than 45% of the Fortune 500 companies. He credits demand for Zero Trust and AI-focused solutions as the driver behind the company’s growth, positioning Zscaler as one of the two pure-play SaaS security firms to pass the $3 billion ARR milestone.
Amid the firm’s growth, Chaudhry warns that the “breakneck pace” of AI adoption comes with new and complex risks.
“The adoption of AI at this breakneck pace is creating new security challenges such as model jailbreaking, prompt injection, model poisoning and more. The growth in AI also increases complexity and creates new cyber risks.”
Earlier this year, a Fortune 500 cybersecurity giant sounded the alarm after investigators confirmed that a ransomware crew relied on generative AI to accelerate its campaign against more than 100 organizations worldwide.
FunkSec, a group initially focused on data theft and extortion rather than encryption, acknowledged using AI models to write code snippets, generate phishing templates and speed up tooling. The gang’s leak site listed its first victim in December, with attacks expanding into the new year. At least 113 companies across the US, Italy, Spain and Brazil were struck, including a firm working in child protection.
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